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Overstock.com Announces $1.1 Million Net Income on 191% Revenue Growth in Fourth Quarter

SALT LAKE CITY, Jan 27, 2003 (BUSINESS WIRE) --

Overstock.com Inc. (Nasdaq: OSTK) today reported financial results for its fourth quarter and year ended Dec. 31, 2002.

"Our fourth quarter results surpassed even our own expectations," said Patrick Byrne, CEO and president of Overstock.com. "In what turned out to be a lackluster quarter for many retailers, we managed to generate record sales growth and achieved net income profitability for the fourth quarter. We credit these results to our continued discipline of building a lean and efficient infrastructure that can support offering low prices to consumers with a high level of customer service."

Key Financial and Operating Metrics:

Revenue -- In Q4-02, revenue totaled a record $41.5 million, a 191 percent increase over $14.3 million recorded in Q4-01. For the year, revenue totaled a record $91.8 million, a 129 percent increase over $40.0 million recorded in 2001.

Gross Profit -- In Q4-02, gross profit totaled a record $9.1 million, a 254 percent increase over $2.6 million recorded in Q4-01. For the year, gross profit totaled a record $18.3 million, a 242 percent increase over $5.4 million recorded in 2001.

Gross Margin -- In Q4-02, gross margin improved to a record 22 percent compared to 18 percent recorded in Q4-01. For the year, gross margin improved to a record 20 percent compared to 13 percent recorded in 2001.

Operating Income (Loss) -- In Q4-02, operating income totaled a record $1.1 million compared to an operating loss of $2.7 million recorded in Q4-01. For the year, operating loss totaled $4.1 million compared to an operating loss of $13.6 million recorded in 2001.

Net Income (Loss) -- In Q4-02, GAAP net income totaled a record $1.1 million, or diluted earnings per share of $0.06, compared to a loss of $2.9 million, or $0.27 diluted loss per share recorded in Q4-01. For the year, net loss totaled $4.6 million, or $0.88 diluted loss per share, compared to a net loss of $13.8 million, or diluted loss per share of $1.29, recorded in 2001.

Gross Merchandise Sales (Non-GAAP) -- During Q4-02, Overstock.com customers spent a record $67.2 million, a 170 percent increase over $24.9 million recorded in Q4-01. During 2002, Overstock.com customers spent a record $154.5 million, a 123 percent increase over $69.3 million recorded in 2001. Gross merchandise sales represents the gross sales price of all sales transactions, including those for which the company only records a commission under generally accepted accounting principles, and therefore differs from GAAP revenue. The following table reconciles total revenue to gross merchandise sales:


                                 Three months ended    Year ended
                                  ----------------- ------------------
                                  Dec. 31, Dec. 31, Dec. 31, Dec. 31,
                                    2001     2002     2001     2002
                                  -------- -------- -------- ---------
Total revenue                     $14,274  $41,529  $40,003   $91,784
 Add: Obligations payable to
  third parties upon sale
  of third-party merchandise        7,392   21,969   18,480    50,962
 Add: Sales returns and
  discounts                         3,259    3,719   10,864    11,737
                                  -------- -------- -------- ---------
Gross merchandise sales
 (non-GAAP)                       $24,925  $67,217  $69,347  $154,483
                                  ======== ======== ======== =========

In conjunction with its fourth quarter earnings release, Overstock.com will broadcast its conference call live over the Internet on Tuesday, Jan. 28, at 8:30 a.m. ET (5:30 a.m. PT). Interested parties are invited to listen by logging on or calling 800/289-0468 (in the United States) or 913/981-5517 (outside the United States).

About Overstock.com

Overstock.com is a publicly traded company listed on the NASDAQ National Market System, headquartered in Salt Lake City, and can be found online at www.overstock.com.

Note Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, statements regarding our ability to build an efficient infrastructure and our ability to offer low prices to consumers with a high level of customer service. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ, including, but not limited to, our limited operating history, our ability to manage growth, a general downturn in economic conditions, and such other risks as identified in our Prospectus dated May 29, 2002, filed with the Securities and Exchange Commission and all subsequent filings with the Securities and Exchange Commission, which contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

                          Overstock.com Inc.
                 Consolidated Statements of Operations
               (in thousands, except per share amounts)
                                      Three months ended
                         --------------------------------------------
                         Dec. 31, Mar. 31, Jun. 30, Sept. 30, Dec. 31,
                           2001     2002     2002     2002      2002
                         -------- -------- -------- -------- --------
Direct revenue           $12,392  $10,029  $11,853  $20,759  $35,302
Commission revenue         1,882    1,659    2,230    2,857    5,633
Warehouse revenue            -        379      297      192      594
                         -------- -------- -------- -------- --------
 Total revenue            14,274   12,067   14,380   23,808   41,529
Cost of goods sold        11,689    9,990   11,831   19,238   32,382
                         -------- -------- -------- -------- --------
  Gross profit             2,585    2,077    2,549    4,570    9,147
Operating expenses:
 Sales and marketing
  expenses                 1,431    1,219    1,313    2,083    4,054
 General and
  administrative expenses  2,741    2,802    2,195    2,372    3,456
 Amortization of goodwill    759        -        -        -        -
 Amortization of
  stock-based compensation   324      846      806      674      577
                         -------- -------- -------- -------- --------
 Total operating expenses  5,255    4,867    4,314    5,129    8,087
                         -------- -------- -------- -------- --------
Operating income (loss)   (2,670)  (2,790)  (1,765)    (559)   1,060
Interest income               48       22       49      229      103
Interest expense            (285)    (240)    (208)      (7)     (10)
Other income (expense),
 net                          10        1     (442)      63      (66)
                         -------- -------- -------- -------- --------
Net income (loss)         (2,897)  (3,007)  (2,366)    (274)   1,087
Deemed dividend related to
 redeemable common stock    (102)    (111)    (106)     (97)     (92)
Deemed dividend related to
 beneficial conversion
 feature of preferred
 stock                       -     (6,607)     -         -       -
                         -------- -------- -------- -------- --------
Net income (loss)
 attributable to common
 shares                  $(2,999) $(9,725) $(2,472)   $(371)    $995
                         ======== ======== ======== ======== ========
Net income (loss) per
 share
 - basic                  $(0.27)  $(0.87)  $(0.20)  $(0.03)   $0.07
 - diluted                $(0.27)  $(0.87)  $(0.20)  $(0.03)   $0.06
Weighted average common
 shares outstanding
 - basic                  11,178   11,171   12,280   14,447   14,486
 - diluted                11,178   11,171   12,280   14,447   15,696
Gross merchandise sales
 (non-GAAP)
Total revenue            $14,274  $12,067  $14,380  $23,808  $41,529
 Add:  Obligations
  payable to third
  parties upon sale
  of third-party
  merchandise              7,392    7,031    9,474   12,488   21,969
 Add:  Sales returns
  and discounts            3,259    2,891    2,651    2,476    3,719
                         -------- -------- -------- -------- --------
Gross merchandise sales
 (non-GAAP)              $24,925  $21,989  $26,505  $38,772  $67,217
                         ======== ======== ======== ======== ========
                          Overstock.com Inc.
                 Consolidated Statements of Operations
               (in thousands, except per share amounts)
                                                   Year ended Dec. 31,
                                                   -------------------
                                                      2001      2002
                                                   --------- ---------
Direct revenue                                      $35,243   $77,943
Commission revenue                                    3,965    12,379
Warehouse revenue                                       795     1,462
                                                   --------- ---------
 Total revenue                                       40,003    91,784
Cost of goods sold                                   34,640    73,441
                                                   --------- ---------
  Gross profit                                        5,363    18,343
Operating expenses:
 Sales and marketing expenses                       $ 5,784   $ 8,669
 General and administrative expenses                  9,441    10,825
 Amortization of goodwill                             3,056       -
 Amortization of stock-based compensation               649     2,903
                                                   --------- ---------
  Total operating expenses                           18,930    22,397
                                                   --------- ---------
Operating loss                                      (13,567)   (4,054)
Interest income                                         461       403
Interest expense                                       (729)     (465)
Other income (expense), net                              29      (444)
                                                   --------- ---------
Net loss                                            (13,806)   (4,560)
Deemed dividend related to redeemable common stock     (404)     (406)
Deemed dividend related to beneficial conversion
 feature of preferred stock                             -      (6,607)
                                                   --------- ---------
Net loss attributable to common shares             $(14,210) $(11,573)
                                                   ========= =========
Net loss per common share - basic and diluted        $(1.29)   $(0.88)
Weighted average common shares outstanding - basic
 and diluted                                         10,998    13,108
                          Overstock.com Inc.
                    Consolidated Balance Sheet Data
                            (in thousands)
                                                    Dec. 31,  Dec. 31,
                                                      2001      2002
                                                   --------- ---------
Cash and marketable securities                       $3,729   $32,662
Inventories, net                                      7,586    13,954
Working capital                                       3,071    35,679
Total liabilities                                    10,450    20,322
Total stockholders' equity                            5,980    39,271
Overstock.com Inc., Salt Lake City
Rich Paongo, 801/947-3132 (Investor Relations)
rpaongo@overstock.com
Leslie A. Dotson, 415/377-4414 (Public Relations)
ladotson@earthlink.net

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